Kuwaiti oil production and exports - (Illustrative image)
The UAE and Kuwait cut oil production as shipping through the Strait of Hormuz is disrupted.
The UAE and Kuwait have begun implementing actual cuts in oil production as the near-closure of the Strait of Hormuz continues to impact global energy markets and disrupt supplies from the world's largest crude-producing region.
The Abu Dhabi National Oil Company (ADNOC) said in a statement that it is "managing offshore production levels to meet storage requirements," without providing further details. Similarly, the Kuwait Petroleum Corporation (KPC) announced production cuts at its fields and refineries due to "Iranian threats targeting the safety of shipping through the Strait of Hormuz," according to Bloomberg.
Military tensions in the Middle East have effectively led to the near-complete closure of the strait to shipping, following repeated Iranian threats targeting maritime traffic. This disruption has choked off exports from the region and pushed oil prices in London to their highest closing level in over two years, nearing $93 a barrel, amid fears of a renewed surge in global inflation and a growing search by consumers for alternatives.
According to informed sources, Kuwait began reducing its production by approximately 100,000 barrels per day early Saturday morning, with the reduction expected to nearly triple on Sunday. Further gradual cuts are anticipated, depending on storage levels and developments in the Strait of Hormuz. Kuwait's production reached approximately 2.57 million barrels per day in January, and the country relies entirely on the Strait of Hormuz as its primary export route.
As storage tanks reached capacity, Kuwait also reduced refining rates at its three refineries: Al-Zour, Mina Al-Ahmadi, and Mina Abdullah, which have a combined capacity of approximately 1.4 million barrels per day.
In a notable legal move, the Kuwait Petroleum Corporation declared force majeure on sales of crude oil and refined products, a clause that allows the company to deviate from certain contracts due to circumstances beyond its control.
The UAE is utilizing pipelines that bypass the Strait of Hormuz.
The UAE, OPEC's third-largest producer in January with supplies exceeding 3.5 million barrels per day, has activated its export capacity to bypass the Strait of Hormuz, leveraging international storage facilities and the ADNOC pipeline, which transports 1.5 million barrels per day to the port of Fujairah on the west coast. The company confirmed that onshore operations are continuing normally.
These moves by the UAE and Kuwait follow similar actions in the region. Iraq reduced its production earlier this week due to full storage tanks, while Saudi Arabia shut down its largest refinery, and Qatar halted operations at the world's largest liquefied natural gas export facility after drone attacks.
Saudi Arabia is also considering diverting some oil shipments to the port of Yanbu on the Red Sea to avoid transiting the Strait of Hormuz.
Statements from Washington... and an Expansion of Targeting
In a comment attributed to US President Donald Trump, he predicted that oil prices would "fall quickly" once the war, which he described as a "limited operation that will last a little while," is over. Trump indicated that rising prices were expected, but added, "They'll come down very quickly... and we'll have gotten rid of a big cancer on the face of the earth."
In recent weeks, the UAE and Kuwait have witnessed a wave of drone and missile attacks targeting several locations, including the US Embassy in Kuwait and the US Consulate in Dubai, as well as other infrastructure in both countries, signaling an escalation of the conflict in the region.
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